Where once companies could differentiate themselves by price, efficient supply chain or product, now their competitors are doing the same. Today the commercial battleground is customer experience. Not only is a good experience hard to achieve, but according to the Forrester Predictions 2015 report, the gap between the best and worst companies is closing, making differentiation harder still.
A survey undertaken by Gartner showed half of those tasked with improving customer experience report to the chief executive and operating committee, and half do not, suggesting at least some organisations are taking it seriously. But analyst for Gartner Ed Thompson is not convinced that many companies have seen the light.
“In some cases, such as the UK water industry, it is regulatory – if the customer satisfaction rating drops, the sector is fined by the government,” he says. “Overnight, the industry went from not giving much thought to customers, to appointing someone who focused on answering phone calls, fixing pipes and making sure they did not run out of water during droughts.”
Ask consumers without prompting them, ‘Which companies in any industry do you rate highest?’ and Amazon and Apple come out top in 30 countries, according to Mr Thompson, who says Amazon has nailed the core elements of retail. These comprise of three thorny areas: checkout and paying without queueing; finding a product and searching online; and getting help.
The two big initiatives for 2015 are customer journey mapping and personalisation, putting technology in the driving seat
Not only are customers centre stage, they seem to be running the show. “It is interesting to see how organisations create the illusion the consumer has control,” says Gagandeep Gadri, vice president, customer experience and analytics, at Cap Gemini. “MyWaitrose now offers a 20 per cent discount on ten items shoppers can choose from those they purchase most often, rather than having promotions thrown at them.”
Also key to the endeavour are employees. “They touch and connect with the customer, so getting them on board with the experience is key,” he says. An example of where this might work, but often doesn’t, is where a customer can buy a mobile phone from a supermarket and pick it up in store. It is serviced by, say, 02 and he buys insurance on it under the supermarket brand, but sold by a finance company, all of which seems seamless until it becomes apparent that none of the suppliers knows the customer’s loyalty card number. It is downhill from there.
This kind of experience stays with people and even if the errant supermarket gets its act together to provide a first-class service across all channels by 2020, when polled in the street, the offended customer and others will still have a bitter memory from five years before and vote against the brand. This is one reason it is so hard for companies to shift their customer service rating.
Personalisation and customisation
The two big initiatives for 2015 are customer journey mapping and personalisation, putting technology in the driving seat. “People are starting to map and track every consumer across every channel so they can do the right thing at the right time to keep customers or make them happy,” says Mr Thompson.
This will relegate to history disjointed service, but will also bring customisation to services in areas such as business travel to an unprecedented degree. “Airlines are moving their model towards traveller preferences or what they are likely to buy,” says Amadeus Arlene Coyle, director of managed travel for global distribution system and technology company.
Lufthansa has signed up to Amadeus’s Altéa Corporate Recognition technology, which will allow it to tailor service to business customers from the moment the flight is booked, offering preferred baggage and seat options, preferential treatment at the airport with fast tracking through security, plus lounge access.
Customisation has become possible thanks to the amount of data organisations collect about customers, who are prepared to sacrifice some privacy for a more personal experience. A better or more enjoyable journey may also mitigate the universally grim ratings carriers get in the American Customer Satisfaction Index (ACSI).
However, standing out from the crowd is KLM, which Mr Thompson describes as a “world leader in customer experience: they experiment and do things differently”, he says. Latest ruse is sniffer dog Sherlock, a beagle who accompanies cabin crew when they are tidying aircraft after passengers have disembarked. Sherlock sniffs any item – phone, teddy bear, baseball cap – left on board, which is then attached to his harness. He follows the scent of the owner through immigration to locate them and return the item.
But good customer experience is not just about a feel-good factor. Claes Fornell, who set up ACSI, makes the point that companies with higher customer satisfaction scores grow faster, are more profitable and have a higher stock price. “On that basis, you could set up a ‘CSat’ fund, invest in it and it would outperform the Dow Jones. He did and it has,” says Mr Thompson.